FIIs' favourites, FMCG stocks may come under pressure, ITC has margin of safety: Hemindra Hazari

In a chat with ET Now, market expert Hemindra Hazari shares his views on the fast moving consumer goods (FMCG) space.

ET Now: I distinctly remember a report on Jyothy Labs by CLSA, where the brokerage raised concerns over valuations and slowdown in the FMCG sector's growth. Are these concerns valid for the entire FMCG space or should these names be in the buying cart, given that most fund managers see no better opportunities available in the market right now?



Hemindra Hazari: That is the big dilemma that fund managers are facing at this point in time.

ET Now: Is that the reason why stocks like Hindustan Unilever are facing a bit of selling pressure?

Hemindra Hazari: Yes. I would imagine so. Stocks from the FMCG sector have run up quite a bit. A similar a rise like this was observed in the IT space as well. So far, the Q4 numbers by IT firms have disappointed the market a bit, even as they have not been a negative shocker. But, if a similar trend is seen in the results of FMCG companies, given the fact that the sector is over-owned by institutional investors including FIIs, it is possible that you may even see some correction. It seems that the market is not willing to tolerate any weakness in results in sectors which have run up significantly in the past.

ET Now: Will it be hands off for HUL, ITC and a couple of other FMCG names?

Hemindra Hazari: ITC has been hovering just above its 52-week low level. Hence, there you have the margin of safety. But this has not been the case with other FMCG stocks. There are a couple of FMCG stocks which are just off their 52-week highs. Investors have many concerns that present ITC stock price is factoring in. Some of the smart fund management, fund managers are investing in ITC.